If there is a collective agreement in place, the parties are allowed to stipulate other criteria than in the Employment protection act. Most importantly, upon the announcement of the dismissals, further derogations may be agreed upon by the employer and the local union. As the employer often wants to dismiss employees by other criteria than in law or collective agreement and the unions are free to agree on any (non-discriminatory) alternative selections, this provides the unions with a very strong negotiating lever. This may, for example, secure compensation for older dismissed workers. If there is no collective agreement at the affected workplace, the employer must act in accordance with the order of priority rules as stipulated in the Employment protection act. 

Employer organisations have long wished to see the Act reformed to allow for more flexibility, which is opposed by trade unions. As a result of a compromise with the Centre Party and the Liberals, the government tasked social partners to present a joint suggestion for amending the law. The social partners negotiated and (with the exception of the Swedish Trade Union Confederation) reached an agreement in the autumn of 2020 (available here), which is currently in the process of being redrafted into a legislative proposal by the government.

One of the key principles in the Employment protection act is the 'last-in-first-out' rule, whereby companies needing to restructure / lay off staff have to consider the employment tenure, meaning that the last one to be hired should be the first one to be laid off. Under the new proposal, 'last-in-first-out' will still be the guiding principle in the event of a shortage of work. However, if the parties cannot agree on an order of precedence, the employer may by law exempt three employees from the right to continued employment. An employer who is bound by the main agreement may instead exclude three blue-collar workers and three white-collar workers per operating unit, or 15% of the blue and white-collar workers whose employment may be terminated. However, the exemption may not exceed 10% of the workers at the operating unit. Employers with only one operating unit covered by the agreement can instead choose to exclude a total of 4 employees. Another significant change in the new proposals is that, in the case of disputes over unfair dismissals, the employer would not always have to pay the salary of the affected employee until the issue is resolved, as is the case today. It would also become more difficult in general for employers to dismiss employees for ‘personal’ reasons, and there would be greater opportunities for employers to get funds for adjustment and skills support for staff, even when they are not covered by collective agreements. The proposal is expected to pass through the parliament and the amended act will enter into force on 30 June 2022.